myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.

Thursday, 21 September 2023

HexCare (previously Rubberex)

Hextech

PetronM

EPF: the median savings of all ethnicities point to a serious need to shore up savings adequacy.

https://theedgemalaysia.com/node/682163

Why policy takeaway is not Chinese have the most and bumiputeras the least EPF savings and income

By Cindy Yeap / The Edge Malaysia

20 Sep 2023, 02:30 pm

THE low level of retirement savings among Malay and other bumiputera private sector wage earners compared with their fellow Malaysians of Chinese and Indian ethnicity recently made headlines when lawmakers provided such numbers in parliament when arguing against more premature withdrawals of statutory retirement savings from the Employees Provident Fund (EPF).

While the median savings among EPF members of Chinese and Indian ethnicity in May 2023 were higher than that of Malays and other bumiputera, the reality is that the median EPF savings is low even among the Chinese, who make up about 24% of the provident fund’s membership.

According to EPF data, the median savings among the 3.1 million Chinese EPF members was RM47,385 as at May 2023, which works out to only RM197 per month for 20 years. That is just under one-fifth of the prevailing minimum civil service pension of RM1,000 a month — hardly enough to get by, even though the figure looks high when stacked against the median savings of RM7,078 (RM29 a month for 20 years) among the seven million Malay EPF members.

Savings adequacy is also a concern among the one million EPF members who are of Indian ethnicity, even though their median savings of RM15,985 (RM67 a month for 20 years) is above that of the median savings of RM4,579 (RM19 per month over 20 years) among the 1.4 million non-Malay bumiputera EPF members (see Table 1).

That median EPF savings of Malay members are higher than that of non-Malay bumiputera should not cloud the fact that the median savings of all ethnicities point to a serious need to shore up savings adequacy.

With only 19%, or 2.5 million, of the 13.3 million EPF members meeting the EPF’s basic savings by age, not all 3.1 million Chinese EPF members automatically have enough to retire. In short, ethnicity has scant meaning on one’s adequacy of retirement savings relative to more useful details like age, trajectory of wages, education, skills and the industries the EPF members are in.

Experts generally agree that the low level of EPF savings has much to do with low income. Rather than dwelling on ethnicity, policy action that focuses on upskilling and creating higher-income jobs and raising economic complexity should result in greater productivity and higher wages for all Malaysians.

Wednesday, 20 September 2023

Comparing Farm Fresh with Dutch Lady

Market cap of Farm Fresh (RM'000) 2,283,742

Market cap of Dutch Lady (RM'000) 1,433,600

Farm Fresh

Adj PER – Latest 45.35
Dutch Lady

Adj PER – Latest 14.03

Performance Info
Farm Fresh

ROE - 5 Yr Avg10.56

ROE - Latest FY 7.94
Dutch Lady

ROE - 5 Yr Avg 62.91

ROE - Latest FY 11.66

Farm Fresh

Latest YR D/E 0.55

NAB/Share (RM) 0.34 Latest PX / NAB 3.59
EV/EBITDA 25.43
Dutch Lady

Latest YR D/E 0.02

NAB/Share (RM) 6.20 Latest PX / NAB 3.61
EV/EBITDA 14.72

KSL

Quality: Gruesome

Management: -

Valuation: -

MKT Capt (RM m) : 1,182.8

ENT Value (RM m) : 948.6

Total Equity 3,295.6 m

ROE - 5 Yr Avg 4.62

ROE - Latest FY 5.45

PX Growth Rate - 5 Yr Avg (%) 9.93

DPS Growth Rate - 5 Yr Avg (%) NM

EPS Growth Rate - 5 Yr Avg (%) -7.74

Latest YR D/E 0.02

NAB/Share (RM) 3.24

Latest PX / NAB 0.35

I will avoid this stock. Does not fulfill my investing criteria.

Scientex

Scientex Packaging (Ayer Keroh) Bhd

20.9.2023

For the three months ended 31 July 2023, group revenue increased 4.4% to RM185.32 million from RM177.49 million in the preceding quarter mainly due to higher demand from both domestic and export markets. Despite the higher revenue, the Group registered a loss before tax of RM7.86 million compared to a profit before tax of RM12.83 million in the preceding quarter, primarily attributable to the goodwill impairment of RM22.71 million in relation to its operations in Myanmar. Excluding the impact of the goodwill impairment, the Group’s profit before tax increased by 15.8% compared to the preceding quarter mainly due to the increase in revenue.

Tuesday, 19 September 2023

Amway

Its EPS over the last 14 years has been flat, with little growth.

Its DPO ratio was a high of 99.1%.

Monday, 18 September 2023

SKP Resources

Takaful

Performance Info

ROE - 5 Yr Avg24.52

ROE - Latest FY16.04

PX Growth Rate - 5 Yr Avg (%) -0.59

DPS Growth Rate - 5 Yr Avg (%)0.00

EPS Growth Rate - 5 Yr Avg (%)8.66

Latest YR D/E NM

NAB/Share (RM) 2.37

Latest PX / NAB 1.56

KNM

Before 2008, this was a company in the O&G sector with fast growth. It was growing very fast due to frequent acquisition. The market players gave it a high PE. Then it swallowed Borsig. This was a very large company and KNM financed this acquisition with a lot of debt.

When 2008 came, its business declined. Its business shrunk and EPS dropped. Together with contraction of its PE, its share price dropped quickly. It dropped from RM 2.13 per share at the end of 2010 to RM 0.42 at end of 2012. Its huge debt became a big burden.

Its business has not recovered since.

Recent moves by other significant shareholders are interesting.

The lesson here is to recognise that not all growth is good. Growth maybe good increasing the intrinsic value of the company. Growth can also be bad, destroying the intrinsic value of the company. Growing its existing business organically is generally safer than growth engineered through acquisition. Acquiring another has its associated risks.

Hap Seng Consolidated Bhd

Allianz

Saturday, 16 September 2023

Hibiscus

Highly speculative stock.

Sports Toto

Berjaya Corp

It is better to invest in another company. Those in this stock should be aware of the opportunity cost.

A new management is in place. But will they be able to turnaround this company? Turnarounds are usually difficult and can take a long time, if at all.

Berjaya Land

Quality: Fail

Management: -

Valuation: -

Look for another stock to invest.

Hua Yang

Certain businesses are not easy to manage. This company is in real estate development. The business was doing well from 2009 to 2016. From 2016 to now, it had done so poorly.

Look for businesses with durable competitive advantage, selling unique products and services. These businesses should have earnings that are consistent and growing over the long term.

I briefly looked at this company in past and was impressed by its performance. Look at the increasing EPS and DPS from 2009 to 2016.

Perhaps, a lesson here is 5 years is probably a business cycle for many businesses and looking at 10 years or even 15 years results may offer one a better understanding of the long term sustainability of a business.

Boilermech

My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?